Strong U.S. Data Makes USD Rise

USD rose at the end of the last trading week, backed by US data. Strong data may push the Fed to increase interest rates. The Commerce Department said on Friday consumer spending increased in January and underlying inflation picked up by the most in four years, keeping Federal Reserve interest rate increases on the table this year.

The USD index rose above 98 at the end of the last trading week, to steady at 98.13, its highest level since November. The USD index was supported by strong U.S. data, and we may see further increases in the coming period.

The Euro broke the resistance level 1.0960, after preliminary data from Germany showed inflation was below zero in February, reaching its lowest level in more than a year. Price pressures in the euro area remained weak ahead of the ECB meeting next month. The EUR/USD now is trading at 1.09 and we may see further declines to1.0880 and1.0760 levels during this week. Resistance levels are 1.0960 and 1.1030.

Friday, the pound hit a seven-year low affected by talks of UK leaving the EU. The GBP oversold sharply last week and fell by 3.2%. It is worth mentioning, a referendum on whether the UK should remain in the EU or leave will be held on 23rd June. The GBP may extend losses this week and could decline to 1.35.

The dollar pared its decline against the JPY backed by the strong economic data, a decline in demand for safe haven investments and Global Economic Recovery. The USD is looking to break support levels of 114.40.

Gold was negatively affected by the strong U.S. data and declined to 1,220 levels. The precious metal may decline further and re-test support levels.

Oil rallied, capping the biggest weekly jump since 2009. WTI rose by 11% backed by U.S. shale oil production cuts and a production freeze. US crude oil traded below $33 and increases may not exceed $35 in the coming period.


The most important economic events:


USD Pending Home Sales (YoY) (JAN): (GMT 17:00) – Forecast (0.5%) – Previous (0.1%).

EUR Euro-Zone Consumer Price Index - Core (YoY) (FEB A): (GMT 12:00) – Forecast (0.9%) – Previous (0.1%).

EUR Euro-Zone Consumer Price Index Estimate (YoY) (FEB): (GMT 12:00) – Forecast (0.0%) – Previous (0.3%).

GBP Net Lending Sec. on Dwellings (JAN): (GMT 11:30) – Forecast (3.7b) – Previous (3.2b).



Disclaimer

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.